[lbo-talk] even more Bartels

Wojtek Sokolowski swsokolowski at yahoo.com
Wed May 7 09:42:38 PDT 2008


--- Bill Bartlett <billbartlett at aapt.net.au> wrote:


> On the other hand, the accounting entry which is a
> workers nominal
> before tax wage, butters no bread, as the saying
> goes. A worker never
> gets it, doesn't count it and the tax deducted from
> this nominal wage
> (by the employer) and forwarded to the Tax office
> (by the employer)
> was never the employee's to pay to anyone.

[WS:] I do not know about OZ, but that is NOT how the tax system works in this country. First of all, an employee declares "deductions" on Form W4, which specifies how much will be taken away from his or her paycheck in the form of taxes. He/she does that in anticipation of his/her expected total tax liability. That liablity depends on many factors, his/her income, socio-demographic status (married head of household ovber 65, blint etc) number of dependents, home ownership, and a myriad of other factors listed in the Internal Revenue Service (IRS) publications found here: http://www.irs.ustreas.gov/.

At the end of the year, he or she reconciles the amount of tax withdrawn from his/her employee compensation with his/her tax liablity, determined by the IRS rules mentioned above. As a result, he or she may either get a refund of the taxes that he or she paid or pay additional taxes.

That demonstrates that taxes are real dollars that people who are gainfully employed pay out of thier own pockets - that is they may have to pay that money or include that in their disposable income, depending on their particular circumstances - some of which they control (e.g. dependents, marital status, home ownership or certain investments) and some of them they do not (e.g. age or blindness.)

Wojtek

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